The Law of Comparative Advantage Implies That a Nation, Individual

question 74

Multiple Choice

The law of comparative advantage implies that a nation, individual, or region should produce those economic goods for which it

• A) has an absolute advantage.
• B) is a low opportunity cost producer.
• C) is a high opportunity cost producer.
• D) pays the highest wage rate.

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Definitions:

Maximin Criterion

A decision rule used under uncertainty, focusing on maximizing the minimum payoff or outcome.

Worst-off Person

Refers to an individual in a group or society who has the lowest welfare, income, or standard of living, often considered in discussions of equity and distributive justice.

Distribution of Income

Refers to the way in which total income is shared among the holders of different types of assets within an economy.

Negative Income Tax

A tax system that collects revenue from high-income households and gives subsidies to low-income households.